Budget Office: Beyond trust in official economic data

In last Sunday’s column I repeated the bold assertion, which I had made a year ago that a National Assembly Budget Office is “needed to restore trust in official economic data.”  Important as this is, in truth a National Budget Office (NABO) can potentially achieve far more for the restoration of the political economy of Guyana, as I shall argue in this week’s column.

In this regard, readers should note that since its first introduction to the United States Congress in 1974, Budget Offices have spread to several countries around the world and in the process they have acquired the more generic label of fiscal institutions. Presently, those bodies are located in both the legislative and executive branches of government. In the particular case of Guyana, however, I strongly recommend the location of the Budget Office in the National Assembly, for the several reasons outlined below.

Reasons
First, I believe the generic term fiscal institution has been adopted largely because of an implicit bias towards fiscal (taxation) concerns in the operation of these bodies. While fiscal concerns are indeed of inestimable importance in the budgetary process, in the specific context of Guyana issues of spending and its control; value for monies spent; as well as concerns about the accumulation of national debt and the printing of money (as alternatives to taxation), loom just as large in the budgetary process.

Second, in practice Guyana’s Parliament has performed a distinctly subsidiary role to the executive arm of government (presidency). This is so for many reasons, not least of which is the origin of the constitution in presidential and party paramountcy, which successive administrations have steadfastly reinforced, ever since the constitution was first introduced in 1980. As a result, Parliament as a body is not only weak, but perhaps it is weakest in its capacity to address those economic matters confronting the nation and the state, and which are always expressed in the annual National Budgets.

Third, this weakness is readily evident to those who closely monitor the National Assembly’s role in the budgetary process (particularly the budget debates). Clearly the institutional capacity of the National Assembly is very limited in every dimension of the budgetary process, from policy appraisal and oversight to monitoring, programmatic execution, and project implementation. A good recent example of this is the presidential establishment of a Tax Reform Committee.  Months after this presidential action, the National Assembly has not sought to determine for the public’s benefit (and its own) 1) the Terms of Reference of the committee; 2) the scheduled date for completion of its task; or 3) the modalities under which it will operate.

Fourth, apart from the longstanding trust issues with official economic data, the Budget Office offers economic data and analysis independent of the executive arm of the government.

Fifth, I firmly believe the Budget Office can provide a giant step in promoting constitutional reform. It is not incidental that a number of constitutional analysts and state financial management experts consider the Budget Office to be the single most important innovation in the economic governance of modern states. Through empowering the National Assembly in this case, the Budget Office reinforces the separation of powers, which is a foundation principle of democratic governance.

Sixth, a National Assembly Budget Office (NABO) also offers the possibility of addressing three important related issues. One is local government financing in all its aspects (revenue raising, expenditure control, acquisition of assets and the incurring of local debt). Another is that it affords the opportunity to strengthen the capacity of several important public bodies, not always acknowledged as being important parts of the overall system of financial monitoring and governance in Guyana. These include, but are not limited to, the Bank of Guyana, Statistical Bureau, Auditor General’s Office, the Public Utilities Commission, the Ombudsman, the Procurement Commission and the Financial Intelligence Agency. And finally, through its engagement in public consultation and dissemination of information, a NABO offers the opportunity for the public and wider stakeholder involvement in economic governance in Guyana to be enhanced.

Seventh, I am convinced that if the National Assembly were to embark on establishing its own Budget Office, this would be, by any standard an exceptionally bold move. Last year I had raised the rhetorical question: “Will the Budget Office become a reality?” Like then I continue to believe at the time of its consideration by the National Assembly those members who support the ruling party will be the hardest to win approval for this proposal. Paradoxically, however, I believe they would be the greatest beneficiaries of the Budget Office. This is because of the tremendous leverage “information” provides to those able to politically influence/control executive decision-making.

Last, and by no means least, for the NABO to function effectively it would have to be statutorily protected and empowered to access original economic and financial data needed for this work.  This requires, in addition to boldness, political will on the part of both the executive and the National Assembly. One helpful consideration is that these offices have been recently established or are soon to be established, over quite a wide range of countries in the developed north as well as developing countries in Africa, Asia, Latin America and the Middle East. There is therefore, a strong international lobby for good governance that supports Budget Offices and fiscal institutions.

Next week I shall turn towards addressing other aspects of the Budget, starting with what it implies for macroeconomic stability in Guyana over the medium term.

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